happens? then we go to figure 12. and that's your chart, i believe. and it correctly indicates the plateau that you talk about, within the ten-year budget window, where you claim to stabilize the debt to gdp ratio, but you see a similar title wave after that. now from that, i take that you and the administration are prioritizing a constituency in the here and now. republicans, democrats, americans in the here and now, whatever they are, that can vote for you, vote to reelectric or punish all of us now, as the expense of a constituency that will never reward any of us. because why? whether they're republicans or democrats, they don't exist yet,

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they're the children of tomorrow, they're the children of my two boys. you don't agree with that? go ahead. >> i don't agree with that. >> how so. . >> if we could go back to figure 8. what's interesting about that chart, once you get past eight years, why does your green path, you call it a path of prosper y prosperity, why does that decline? i think that's because you guys proposed to take hundreds and hundreds and hundreds of millions of dollars for middle class retirement programs. that's why you got that number down. the reason why we're having this debate is we don't think that's the fair, right thing to do. you all are invoking your children, which i respect, i have children too and i spent my

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life in public service and we share that basic obligation. i would just make the suggestion that as president reagan recognized, and i think most precedents have had to confront, you cannot govern a country if you commit never to raise taxes on anybody, because things happen, wars happen, crises happen. >> if that's the case, what is the proper amount for a federal government to confiscate from its people in order to run its operations? >> that's a good question. although i wouldn't use that word. >> you're confiscating property, you're confiscating the work and the must be of individual citizens to run your operations and if the current level is not appropriate, what is the

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appropriate amount for the federal government to confiscate from its own people to run itself? >> do you think a tax -- >> no, i'm reclaiming my time. if we're not taking enough, what is the proper amount to take. >> in our question, since you're not using confiscation again. >> what amount is it proper to confiscate. >> in our budget, if you were to adopt it, revenues would rise to slightly more than 20% of gdp by the end of the decade which is lower than the revenue forecast implied from the policies in the simpson-bowles plan to which many of you have shown affection. >> a fifth of the gdp. slightly higher, it's been about

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18% to 20%. if you agree with that figure -- >> we proposed spending to about 22% of gdp. and the reason why it's that high is americans are retiring. now -- so we can't suspend the reality of people retiring and because we give people retirement security and health care, medicare and social security, that causes that rise. >> mr. langford? >> thank you. i do agree with you, by the way, this is a long look issue. a lot of people are retiring, we have to make sure that medicare is there, that -- this can't be something immediate, we're going to solve it tomorrow. my concern is and we talked

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about in from last year, the term primary balance and sust n sustainable gets and deficits gives the clear impression that we never balance and we never plan to pay down principal, ever. i understand it's not like a mortgage. but its some concern to say if the whole focus of the administration is let's get us to a spot where we can handle that, we're never planning to pay down principal ever? is there something inherently bad about balancing the budget? >> that's not quite fair because if you get it to 22% of gdp -- >> real dollars. i'm talking about real dollars. is it wrong to ever actually balance the budget?

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should that be a goal to balance the budget? >> i don't think i would say maybe not the ultimate way to think about an ultimate objective. i guess i would say, you're starting from somewhere now and it is hard to imagine governing a country, just think about world war ii, not the mention the recession. >> those words are pretty expensive. >> is it right that it should be our goal to balance the brought. >> over the long run, i would not try to talk you out of having an objective to try to get to balance, i wouldn't try to talk you out of that, but it's all in how you get there and how much you flexibility you leave the president and the congress to deal with a huge

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demographic boom. >> let me ask about a couple of things i'm not sure we addressed. one thing that's come up is the energy taxes. can you be more specific? it's because fairly vague and it's $40 billion. >> we're pretty specific in the budget in the series of tax reforms in the energy sector which would reduce and remove a fair amount of expensive subsidies. >> for instance on the traditional fuels, there's eight major tax pieces there. which would you eliminate? >> you want me to read from the budget flight? >> just the big ones. >> maybe i could explain why we're doing it. >> let me ask why, because some of it was a concern for me. because the president was very clear, we need to be in domestic energy, he talked about how we have this increase in production, which is a good thing for us as a state. here's the concern.

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if we now say, great, that's good, we're getting more production, let's tax that more, do we get less of that or do we get more of that? >> good question. we are in the middle of and we're very confident we're going to see a huge expansion in energy production in this country, oil and natural gas is going to come for a long period of time, we want to see a substantial increase in renewab renewables. the effective tax rate paid by the energy industry today is in the high teens. >> and we have huge production coming online. because it's so capital intensive. >> i don't think i agree with the economics of it. its true, we are proposing to increase their effective tax rate so we're closer to the average everybody else pays because we don't think there's a compelling case for that level of subsidy to the energy industry, so we're going to dial it back.

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but i don't think it's any risk that it's going to get in the way the huge boom of energy production in the united states. >> your larger companies like your exxons and stuff are different than the bulk of the production that's donation wide from very small companies, 12 to 40 people in a lot of companies, this very capital intensive focus and their model is built on that. >> even with these changes, the economics of a debt financed or a mixed equity financed investment in capital industry be quite favorable in energy. >> that's just a tough gamble. i yield back. >> nine minutes off. >> how are we doing? >> we're done.

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>> you want to keen going. >> we said we would try to get you here at 4:30, it's 4:39. let's just say that we will agree to disagree in all of these things. >> one finl word? just one final word. >> this could go on for a while. okay. >> i think you can embrace it. which is that we, if you listen carefully to the debate, as i know you do. and you look at how much democrats have moved on medicare and medicaid and other mandatory, to date it exceeds the amount of movement you have shown on revenues for the high end. so if you will come a little bit closer, we can get a little bit closer, but we're not there. >> back room deals are not what the country is looking for. they're looking for us to lead, to govern, to propose ideas and then to get things done.

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that's what we're trying to do. our friends in the senate aren't even trying. you're trying, you put a budget out and that's the law, you did that, but your descriptions of budget we just take issue with, i think we can have a better economy through broad rate low rate tax reform. i think you agree with that and you can get a higher share of taxes from higher earners with a better tax system that doesn't compromise growth. >> not without a modest increase in their effective tax rate. but we'll get there. >> you really want the last word. i'm just not going to let you have it. the meeting is adjourned.

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the overall budget for next year is proposed at $3.8 trillion in total spending

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reducing the debt a projected $3 trillion. discretionary spending goes down 3%, but overall spending increases. chinese vptd xi jinping was in iowa yesterday for a speech. he will -- this morning washington journal talked to a reporter following the story about the impact of the visit. >> and here is the cover of cq weekly, too big to bash as the u.s. does more business with the chinese, policymakers find it harder to take a tough stance. why is china too big to bash in your view? >> thanks for having me on and we tried to take a look in this

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piece that china will emerge as a major issue on the campaign trail. there will be critics of the chinese and their economy. and mitt romney and the business community taking swipes at china and its policies. you have quite a bit of a split in the business community about what to do about china, there's a lot of angst about currency, piracy and things like that and a lot of companies are making quite a bit of money in china. as a result there's a split in the business community and as a result you're not seeing a lot of action from the government. >> and you write in your piece, two sides of the coin is the name of the piece, but you write congress's policy toward china when lawmakers weighed in heavily on issues crowneding taiwan and human rights. the fact is that u.s. and chinese officials have managed the enormously compromised

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china-u.s. relationship. >> the u.s. government and the chinese government have all these different dialogues and commissions that try to work out foreign policy issues, trade issues and makes sure that if one issue flares up, that the rest of the relationship keeps going. i mentioned early in the relationship after the u.s. and china normalized relations in the '70s, on taiwan, on civil rights, they weighed in very heavily. we passed a china currency bill. but the house didn't pass it, it's not going to the president's desk. there's shouting, not too much action coming from congress because of that sort of bigger relationship now. >> you quote in your art, senator jim demint, a republican

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from south carolina who is not known a meddling stance. why do you talk to senator demint? >> i spoke to him because in south carolina you have a state where there's been quite a few factories, a lot of manufacturing has been dismantled over the last several years but there's also a big relationship trade and investment between china and south carolina. so he was saying you know it really depends on who you talk into the business community on whether the relationship is going well or going poorly. manufacturers feel that china is not playing by the rules, and is really taking a hit or as a result american manufacturers are taking a hit. but you have a lot of tech companies doing really well in china. as a result there's a big split. he doesn't want to upset the apple cart, so to speak. >> yxi jinping is in town visiting and the headlines is he met with his critics in congress or there's been all these

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warnings whenever we talk to our chinese counterparts. what's the approach right now of the current congress and the current administration and does the approach to china change with each administration? >> i think the relationship or the approach stays fairly constant. i think president obama came in particularly given the economic circumstances he was in a big stimulus package, a lot of bore roger that had to be done. there was perception he was being soft when it came to economic matters in china, particularly among a lot of his critics. that's definitely shifted in the last year or two. president obama has taken a much more at least publicly, a much more aggressive attack on china. in the state of the union a few weeks ago saying he was going to get tough on trade cases, trade enforcement, things like that as well on foreign policy issues you saw the president go to asia late last year and announce this pivot towards asia, which was a

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lot of folks think it's designed to contain china's ambition. it's changed from a softer tone in his earlier administration. >> in criticism of china you write often sells at the national political level. many state and local officials are unabashed to lure chinese investment, increase exports to china and generally cement local economic ties with the world's second largest economy. >> right. you have governors and mayors going on trade delegations to china to drum up business. while in congress and at the national level there's a lot of criticism often of china investment in the u.s., again at the state and local level you have quite a bit going on. in ohio, a lot of the democratic delegation in ohio, they are critical of china but you have in toledo you have the mayor very actively trying to get

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chinese investors in to help rebuild the waterfront and do other investment activities there. there's a bit of a disconnect between the rhetoric at the national level and what's going on in states and cities. >> joe schatz is a staff writer with "congressional quarterly." why your writing about china >> because it's a huge -- i cover economic policy generally and china in the last few years has really become -- you see china come up in all these different issues whether it's trade, whether it's taxes, technology. all these different issues across the board. and you really can't get away with it. can't get away from it. as a result it just keeps coming up and you hear a lot more members of congress talking about it. it's something that really has risen on the congressional agenda in the past few years, particularly since the financial crisis, and with the global balance of power shifting a bit and china becoming more important on a range of issues. and i got to go to china last year. >> what was your impression when

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you were there? >> it was interesting how, i was there for two weeks on a reporting trip and we met with a lot of business officials and political officials. what was interesting to me in particular is how focused they were on what was happening here. this was right after the whole debt ceiling debate in congress and everybody was asking what was going on in washington and why were things so seemingly in disarray back here in washington. and also they pay a lot of attention to the debates that happen here in washington. everybody knows chuck schumer's name in beijing. chuck schumer the senator from new york who takes a very aggressive stance when it comes to china currency. they pay attention to all of that and are paying attention to what's happening here. >> were you able to travel on your own at all. were you able to see the factories where stuff is made like this coffee cup or ipad. >> we saw an auto factory. it was a fairly scripted visit. we were in beijing and hong

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kong. we saw some manufacturing but, no, we couldn't go out on our own. really in china it's fairly, you know, journalists have to, are fairly, they are monitored very heavily and you have to have a very good plan you run by the government in order to get your ability to go out there. >> back to your cover sorry, china status as a u.s. government's biggest credit tore is one elephant in the room but another big factor is that for all of the complaints many u.s. corporations, big and small make real money in china, more than $150 billion a year. where is that money? companies that are doinge from business in china selling to chinese consumers. they are undergoing a huge boom and has been for several years. there is a lot of money to be made for u.s. companies selling to chinese. there are also companies like apple the to the manufacturing in china. not just low-and manufacturing,

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but a lot more high-tech stuff that was not done before. it is a real mix to move up the value chain so to speak and so you have -- it's a real mix of companies. again you have apple, you have gm. gm is doing big business in china and it's selling a lot -- china has become it's biggest market now, far bigger than theh u.s. >> the u.s.e is the world's 2, largest economy still. japan. china is number two. japan, india, germany, five o largest economies. how much bigger is the u.s. economy? how big is the u.s. economy compared to the chinese economy >> i mean it's quite a bit bigger. it's quite a bit bigger. >> is it double the chinese economy, do you know? >> i don't want to give you a number that's wrong right now but we're until several at leas. a decade off from china even challenging the u.s. supremacy in the size of the economy.

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and so it's still -- the talk of, you know, the decline of the u.s. economy is in relationship to the chinese economy is still, you know, a little bit exaggerated but has become a bil issue on the campaign trail particularly in an economy wheri job creationn, is still pretty slow and, again, there's a lot o of debate over our place in the world. y we'll run through some numbers and then we'll begin taking your calls.th when it comes to total trade with china with the u.s. that equals about $503 billion and that was in 2011 alone. we exported about $104 billion to china and imported from china about $400 billion worth of goods. now, world trade, when it comes to world trade and the u.s. and china alone, our china trading partner is 14% of all the trading that the u.s. does imp worldwide and china, we import

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18% of all our imports come fror china. china then is number three for . our exports. and that is from the u.s. to eqina, top exports to china include electrical machinery anc equipment, power generation equipment, agricultural products, aircraft and spacecraft, optics and medical l equipment and then our imports from china electrical machinerye and equipment, power generation equipment, apparel, $29 billion worth of apparel, $25 billion worth of toys, gajs and sports equipment and furniture, $20 sis billion and that's facts c and figures by the u.s.-china business council.rom first call-up for joe schatz from "cq weekly" comes from florida. go ahead. >> caller: i have aan question. about a month or so ago there was an article about the apple n plan tt that makes the ipad tha

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had the explosion that killed several workers and it talked ts about how, you know, they work with these chemicals that are p just -- there's no regulations at all and the aluminum dust build up and they had an explosion that killed several people and it talked about the a way they make them live maybe ten people in a two bedroom apartment in a factory owned campus that they have to live on site. and they said the guy that did the op-ed piece on was a college graduate and he made $2,500 a it year in american money.e over now how can the u.s. continue to compete when the people over there are only making $2,000, $3,000 a year and that's a lot w of money in china, and i don't understand how we could ever is compete with that? >> it's an interesting questions and that's a question that comes up a lot now in the congressional debate particularly as we talk about